A Great New Niche for Mortgage Brokers – Hard Money Lending
With the subprime crisis of a few years ago, and the recession of the past couple of years, the demand for the services of mortgage brokers has diminished. These facts along with tighter lending standards, has led to tough times for mortgage brokers, with many having difficulty finding enough clients to maintain their business.
Although lending standards have tightened, real estate investors are still finding ways to fund their real estate projects. Many are turning to hard money lenders to obtain the financing they need to flip a property, invest in a foreclosure, fund a new construction, and other real estate projects. These hard money loans are asset based loans, using the intrinsic value of the property as collateral for the loan, rather than relying on the investor’s credit worthiness.
Mortgage brokers, who find themselves short on clients, can look to hard money lending to expand their clientele. Lending to real estate investors will allow them to take advantage of this growing segment of the market. Those who have jumped into the hard money lending arena find that they have little competition with other brokers, and have many clients looking for a broker to help them with their financing needs.
An added advantage is that real estate investors, unlike individual homeowners are repeat customers. Most will make multiple investments in a year, seeking new financing for each, thereby increasing your business two, three, and even four fold per new client. Helping real estate investors find proper financing is an underserved market, and a broker who teams up with the right hard money lenders can quickly capitalize on this need.
A broker wanting to expand into hard money lending should research the market as well as the availability and reputations of the hard money lenders in their area. Start by doing an internet search on the hard money lenders in your area, and assess their offerings, experience, and dedication to hard money lending. Then set up interviews with the firms that stand out. You want a hard money lender who is very knowledgeable about the local real estate market, who strictly deals with hard money lending, and is well capitalized, with many financial backers. They should be very professional, organized, and of course ethical. Hard money lending can be a very profitable niche for mortgage brokers who team with the right hard money lenders.
Jason Balin at Hard Money Bankers, LLC